Acquisitions & Mergers
"Strategic Leverage Through Integration of Core Competencies & Processes."
It has recently been estimated that over two-thirds of acquisitions and mergers flat-out fail or do not live up to their initial expectations. Why do so many acquisitions and mergers end in failure or disappointment when everyone at onset believed it to be the right thing to do?
Upon closer evaluation of the decision-making process of most acquisitions and mergers, it is surprising that even one-third succeed. On paper, the idea of a merger or an acquisition could make perfect and rational sense.
The financial analysis assures the economics, strategic planners assure the business energy, and merger teams identify redundancies and potential economies of scale. From all accounts, due diligence has been done, and everything is a "go" to proceed with the successful merging of the enterprises.
There is only one problem: The acquisition and subsequent merger plan are developed from primarily one perspective. The acquisition and merger tasks are viewed through an economic and technical lens, distorting and underestimating the nature of the critical success factors inherent in the enterprise. Enterprises are economic (financial), and complete with technical (work systems). However, they are also cultural (values and beliefs) and political (power and influence) entities. All of these elements make an enterprise successful. At least half of the challenge is resolving the social and political dimensions of the merging organizations. When understood from this perspective, the (1) work systems, (2) the cultural, and (3) power structures two-thirds of a merger is non-rational and intangible. Why is this a crucial factor? “Acquisitions and mergers” are always acquisitions in the end. Merging the cultures and political structures of the parties are often left unattended = two-thirds failure rate.
The least understood and often overlooked social system factors of an enterprise is the "glue" that keeps the enterprise integrated and working as a complete organization. An organization’s social and cultural systems are at least equally as important, if not more important, as the technical work systems, capabilities of the people and processes. When this fact is ignored, or not given appropriate consideration, the risk for the new acquisition and merger is significantly increased. Members of the newly merged organization who must make it work on a day-to-day basis experience these social issues on a personal level. At least half (some say more) of an acquisition and merger's success is based on factors other than quantitative and rational analysis.
Vantage Resources, Inc. understands the complex and dynamic variables of successful acquisition and merger. Our systematic approach takes the merging organizations as complete and integrated systems. The work processes, support and administrative systems, the cultural values, and political and power structures are factors into the final organizational design. A new organizational design alternative is created, often different than either of the original enterprises, leveraging the attractive elements of each that drove the acquisition and merger strategy. The new fully merged and integrated organizational alternative is, therefore, capable of delivering the synergistic results the acquisition and merger strategy was originally intended to produce.
For more information, call Vantage Resources, Inc. today.